NW372 Madibeng AFS 2009-10 unaudited

1.4 MB·

Madibeng Local Municipality
Annual Financial Statements
Frans Rootman & Associates CC
Issued 31 August 2010
Madibeng Local Municipality
Annual Financial Statements for the year ended 30 June 2010
General Information
Legal form of entity Local Municipality
Nature of business and principal activities Providing municipal services
Mayoral committee
Executive Mayor Clr Molokoane SF
Councillors Clr Garikue JJ
Clr Klaas S
Clr Maakane P
Clr Mangoathe FM
Clr More SML
Clr Nakeli DC
Clr Rakolle NR
Clr Tlhopane MP
Grading of local authority 10
Accounting Officer MJ Bosielo Acting Municipal Manager
Chief Finance Officer (CFO) NA Masithela
Accountants Frans Rootman & Associates CC
1 - 03 September 2010 - 08:55 AM
Madibeng Local Municipality
Annual Financial Statements for the year ended 30 June 2010
Index
The reports and statements set out below comprise the annual financial statements to be presented to the Council:
Index Page
Accounting Officer's Responsibilities and Approval 3
Accounting Officer's Report 4
Statement of Financial Position 5
Statement of Financial Performance 6
Statement of Changes in Net Assets 7
Cash flow statement 8
Accounting Policies 9 - 19
Notes to the Annual Financial Statements 20 - 42
Appendixes:
Appendix A: Schedule of External loans 43
Appendix B: Analysis of Property, Plant and Equipment 45
Appendix C: Segmental analysis of Property, Plant and Equipment 48
Appendix D: Segmental Statement of Financial Performance 50
Appendix E(1): Actual versus Budget (Revenue and Expenditure) 52
Appendix E(2): Actual versus Budget (Acquisition of Property, Plant and Equipment) 55
Appendix F: Disclosure of Grants and Subsidies in terms of the Municipal Finance 57
Management Act
Abbreviations
COID Compensation for Occupational Injuries and Diseases
CRR Capital Replacement Reserve
DBSA Development Bank of South Africa
GRAP Generally Recognised Accounting Practice
GAMAP Generally Accepted Municipal Accounting Practice
HDF Housing Development Fund
IAS International Accounting Standards
IMFO Institute of Municipal Finance Officers
IPSAS International Public Sector Accounting Standards
MEC Member of the Executive Council
MFMA Municipal Finance Management Act
MIG Municipal Infrastructure Grant
2 - 03 September 2010 - 08:55 AM
Madibeng Local Municipality
Annual Financial Statements for the year ended 30 June 2010
Accounting Officer's Responsibilities and Approval
I am responsible for the preparation of these Annual Financial Statements, which are set out on the attached pages, in
terms of Section 126(1) of the Municipal Finance Management Act and which I have signed on behalf of the Municipality.
I certify that the salaries, allowances and benefits of Councilors as disclosed in the notes of the attached Annual Financial
Statements are within the upper limits of the framework envisaged in Section 219 of the Constitution, read with the
Remuneration of Public Officer Bearers Act and the Minister of Provincial and Local Government’s determination in
accordance with this Act.The annual financial statements set out on pages 4 to 42, which have been prepared on the
going concern basis, were approved by the accounting officer on 31 August 2010.
Accounting Officer
MJ Bosielo - Acting Municipal Manager
3 - 03 September 2010 - 08:55 AM
Madibeng Local Municipality
Annual Financial Statements for the year ended 30 June 2010
Accounting Officer's Report
The accounting officersubmitshis report for the year ended 30 June 2010.
1. Review of activities
Main business and operations
The municipality is engaged in providing municipal services and operates principally in South Africa.
The operating results and state of affairs of the municipality are fully set out in the attached annual financial
statements and do not in our opinion require any further comment.
2. Going concern
The annual financial statements have been prepared on the basis of accounting policies applicable to a going concern.
This basis presumes that funds will be available to finance future operations and that the realisation of assets and
settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business.
The ability of the municipality to continue as a going concern is dependent on a number of factors. The most significant of
these is that the accounting officer continue to procure funding for the ongoing operations for the municipality.
3. Subsequent events
The accounting officeris not aware of any material matter or circumstance arising since the end of the financial year.
4. Accounting Officer's interest in contracts
None.
5. Management agreement
Mr. Eric Matlawe was appointed as Administrator in terms of section 139 of the Constitution of the Republic of South
Africa in March 2010.
6. Accounting Officer
The accounting officer of the municipality at the date of this report was : MJ Bosielo - Acting Municipal Manager
4 - 03 September 2010 - 08:55 AM
Madibeng Local Municipality
Annual Financial Statements for the year ended 30 June 2010
Statement of Financial Position
Figures in Rand Note(s) 2010 2009
Assets
Current Assets
Inventories 2 4,783,364 4,158,063
Other financial assets 3 159,334 138,545
Other receivables from non-exchange transactions 4 2,550,399 2,751,787
VAT receivable 9 5,574,369 -
Consumer debtors 5 114,796,073 126,071,978
Cash and cash equivalents 6 58,267,833 13,732,995
186,131,372 146,853,368
Non-Current Assets
Property, plant and equipment 7 1,460,340,135 1,386,951,833
Other financial assets 3 61,120,783 57,114,082
1,521,460,918 1,444,065,915
Total Assets 1,707,592,290 1,590,919,283
Liabilities
Current Liabilities
Other financial liabilities 10 459,972,825 404,722,230
Trade and other payables 11 278,917,944 187,081,530
VAT payable 12 - 24,575,627
Consumer deposits 13 8,111,113 7,720,065
Bank overdraft 6 43,049,396 31,047,036
790,051,278 655,146,488
Non-Current Liabilities
Other financial liabilities 10 26,082,141 40,418,306
Finance lease obligation 14 976,851 2,215,264
Unspent conditional grants and receipts 15 500,000 -
Provisions 16 70,806,893 59,068,893
98,365,885 101,702,463
Total Liabilities 888,417,163 756,848,951
Net Assets 819,175,127 834,070,332
Net Assets
Reserves
Capitalisation reserve 18 240,120,716 222,224,165
Government grant reserve 19 665,266,015 588,784,414
Accumulated surplus (86,211,604) 23,061,753
Total Net Assets 819,175,127 834,070,332
5 - 03 September 2010 - 08:55 AM
Madibeng Local Municipality
Annual Financial Statements for the year ended 30 June 2010
Statement of Financial Performance
Figures in Rand Note(s) 2010 2009
Revenue
Property rates 22 129,035,519 107,770,634
Service charges 23 320,729,923 258,959,338
Rental of facilities and equipment 974,704 1,508,337
Interest received - debtors 33,795,199 38,112,671
Interest received - investment 26 8,025,611 6,670,571
Dividends received 10,046 -
Income from agency services 7,427,565 7,315,006
Fines 801,053 1,206,877
Licences and permits 3,868,027 3,868,289
Government grants & subsidies 24 291,136,797 288,903,915
Other income 25 16,174,523 10,932,899
Total Revenue 811,978,967 725,248,537
Expenditure
Personnel 27 (197,349,516) (173,259,968)
Remuneration of councillors 28 (14,469,949) (13,731,639)
Leave pay (provision) / reversal 29 (2,247,009) 1,216,739
Depreciation and amortisation 30 (37,479,149) (38,661,639)
Finance costs 31 (57,574,863) (52,872,563)
Provision - bad debts 32 (128,242,263) (95,443,000)
Repairs and maintenance (24,592,149) (33,138,319)
Bulk purchases 34 (217,428,536) (157,348,332)
Contracted services 33 (51,333,103) (67,696,487)
General expenses 35 (101,935,113) (96,944,319)
Total Expenditure (832,651,650) (727,879,527)
(Deficit) / surplus for the year (20,672,683) (2,630,990)
6 - 03 September 2010 - 08:55 AM
Madibeng Local Municipality
Annual Financial Statements for the year ended 30 June 2010
Statement of Changes in Net Assets
Capital Capitalisation Government Total reserves Accumulated Total net
replacement reserve grant reserve surplus assets
Figures in Rand reserve
Balance at 01 July 2008 76,668,477 232,318,026 481,495,097 790,481,600 94,299,891 884,781,491
Changes in net assets
Assets purchased (1,659,633) 734,406 113,592,411 112,667,184 1,659,633 114,326,817
Write off CRR (75,008,844) - - (75,008,844) 75,008,844 -
Other adjustments - - - - 991,831 991,831
Offsetting depreciation - (10,828,267) (6,303,094) (17,131,361) 17,131,361 -
Contribution from Acc Surplus - - - - (114,326,817) (114,326,817)
Provision post retirement medical aid - - - - (49,072,000) (49,072,000)
(76,668,477) (10,093,861) 107,289,317 20,526,979 (68,607,148) (48,080,169)
Surplus for the year - - - - (2,630,990) (2,630,990)
Sub total (76,668,477) (10,093,861) 107,289,317 20,526,979 (71,238,138) (50,711,159)
Total changes (76,668,477) (10,093,861) 107,289,317 20,526,979 (71,238,138) (50,711,159)
Balance at 01 July 2009 - 222,224,165 588,784,414 811,008,579 23,061,753 834,070,332
Changes in net assets
Surplus for the year - - - - (20,672,683) (20,672,683)
Unknown deposits prior to July 2009 - - - - 4,543,505 4,543,505
Prior year payments cancelled - - - - 1,233,973 1,233,973
Assets purchased - 28,260,401 82,607,050 110,867,451 (110,867,451) -
Offsetting depreciation - (10,363,850) (6,125,449) (16,489,299) 16,489,299 -
Total changes - 17,896,551 76,481,601 94,378,152 (109,273,357) (14,895,205)
Balance at 30 June 2010 - 240,120,716 665,266,015 905,386,731 (86,211,604) 819,175,127
Note(s) 17 18 19
7 - 03 September 2010 - 08:55 AM
Madibeng Local Municipality
Annual Financial Statements for the year ended 30 June 2010
Cash flow statement
Figures in Rand Note(s) 2010 2009
Cash flows from operating activities
Receipts
Delivery of services and other revenue 833,523,830 773,788,241
Interest income 8,025,611 6,670,571
841,549,441 780,458,812
Payments
Suppliers and employees (682,000,655) (551,639,233)
Finance costs (57,323,597) (52,391,773)
(739,324,252) (604,031,006)
Net cash flows from operating activities 37 102,225,189 176,427,806
Cash flows from investing activities
Purchase of property, plant and equipment 7 (110,867,451) (104,498,349)
Proceeds from sale of financial assets (4,027,490) (5,659,788)
Increase in non-current investment - (4,230,083)
Net cash flows from investing activities (114,894,941) (114,388,220)
Cash flows from financing activities
Repayment of other financial liabilities 40,914,430 114,759
Finance lease payments (1,489,679) (815,750)
Other 5,777,479 (49,072,000)
Net cash flows from financing activities 45,202,230 (49,772,991)
Net increase/(decrease) in cash and cash equivalents 32,532,478 12,266,595
Cash and cash equivalents at the beginning of the year (17,314,041) (29,580,636)
Cash and cash equivalents at the end of the year 6 15,218,437 (17,314,041)
8 - 03 September 2010 - 08:55 AM
Madibeng Local Municipality
Annual Financial Statements for the year ended 30 June 2010
Accounting Policies
1. Presentation of Annual Financial Statements
The annual financial statements have been prepared in accordance with the effective Standards of Generally
Recognised Accounting Practice (GRAP) including any interpretations, guidelines and directives issued by the
Accounting Standards Board.
These annual financial statements have been prepared on an accrual basis of accounting and are in accordance with
historical cost convention unless specified otherwise. They are presented in South African Rand.
A summary of the significant accounting policies, which have been consistently applied, are disclosed below.
These accounting policies are consistent with the previous period.
1.1 Property, plant and equipment
Property, plant and equipment are tangible non-current assets (including infrastructure assets) that are held for use in
the production or supply of goods or services, rental to others, or for administrative purposes, and are expected to be
used during more than one period.
The cost of an item of property, plant and equipment is recognised as an asset when:
 it is probable that future economic benefits or service potential associated with the item will flow to the
municipality; and
 the cost of the item can be measured reliably.
Property, plant and equipment is initially measured at cost.
The cost of an item of property, plant and equipment is the purchase price and other costs attributable to bring the
asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
Trade discounts and rebates are deducted in arriving at the cost.
Where an asset is acquired at no cost, or for a nominal cost, its cost is its fair value as at date of acquisition.
Where an item of property, plant and equipment is acquired in exchange for a non-monetary asset or monetary
assets, or a combination of monetary and non-monetary assets, the asset acquired is initially measured at fair value
(the cost). If the acquired item's fair value was not determinable, it's deemed cost is the carrying amount of the
asset(s) given up.
When significant components of an item of property, plant and equipment have different useful lives, they are
accounted for as separate items (major components) of property, plant and equipment.
Costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs
incurred subsequently to add to, replace part of, or service it. If a replacement cost is recognised in the carrying
amount of an item of property, plant and equipment, the carrying amount of the replaced part is derecognised.
The initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located is
also included in the cost of property, plant and equipment, where the entity is obligated to incur such expenditure, and
where the obligation arises as a result of acquiring the asset or using it for purposes other than the production of
inventories.
Recognition of costs in the carrying amount of an item of property, plant and equipment ceases when the item is in the
location and condition necessary for it to be capable of operating in the manner intended by management.
Major spare parts and stand by equipment which are expected to be used for more than one period are included in
property, plant and equipment. In addition, spare parts and stand by equipment which can only be used in connection
with an item of property, plant and equipment are accounted for as property, plant and equipment.
Major inspection costs which are a condition of continuing use of an item of property, plant and equipment and which
meet the recognition criteria above are included as a replacement in the cost of the item of property, plant and
equipment. Any remaining inspection costs from the previous inspection are derecognised.
Property, plant and equipment are depreciated on the straight line basis over their expected useful lives to their
estimated residual value.
9 - 03 September 2010 - 08:55 AM